Canada: Pay Up: $10 Billion Foreign Judgment Enforceable In Ontario

The application of the "real and substantial connection" test for enforcement of foreign judgments was further clarified by the Ontario Court of Appeal in a recent decision, part of a bitter and protracted legal battle over nearly $10 billion in environmental damages caused by the operations of Texaco (later acquired by the defendant Chevron) in Ecuador. The Court reaffirmed that the test only applies to the subject of the litigation and the court issuing the judgment; there is no secondary inquiry into the connection between the subject matter and the court enforcing the foreign judgment. As a result, the plaintiffs, residents of rural Ecuador harmed by the defendant Chevron's pollution in the Lago Agrio region, can seek enforcement of a judgment of an Ecuadorian court in Ontario. Furthermore, the Court overturned a motion judge's stay of proceedings, which he had ordered of his own initiative upon finding that the plaintiff's had no prospect of recovery in Ontario.

An Unusual Exercise of Judicial Discretion

While there are a number of other issues involved in this complex case, including claims that the judgment was obtained by fraud, the facts before the Court were simple: there was a final judgment in Ecuador against Chevron for US$9.51 billion. The Ecuador plaintiffs sought to have this order recognized and enforced in Ontario against Chevron (an American corporation) and Chevron Canada. Chevron's motion to have the Statement of Claim set aside for lack of jurisdiction was rejected, with the motion judge writing:

"I am not prepared to adopt, as the defendant's argue, a blanket principle that an Ontario court lacks jurisdiction to entertain a common law action to recognize and enforce a foreign judgment against an out-of-jurisdiction judgment debtor in the absence of a showing that the defendant has some real and substantial connection to Ontario or currently possesses assets in Ontario... No jurisprudence binding on me has expressly placed a gloss on that ability to assume jurisdiction by requiring the plaintiff to demonstrate that the non-resident judgment debtor defendant otherwise has a real and substantial connection with Ontario."

However, the motion judge then went on to exercise his discretion, under s.106 of the Courts of Justice Act,  to grant a stay of proceedings, stating that "because Chevron Corp does not have assets here, and there is no reasonable prospect that it will do so in the future, there is no prospect for any recovery here." The Ecuador plaintiffs appealed this stay of proceedings and Chevron cross-appealed the motion judge's finding that the Ecuadorian court's award can be recognized and enforced in Ontario.

Enforcement of a Foreign Judgment in Ontario

In opposing jurisdiction, Chevron and Chevron Canada contended that the Court must apply the "real and substantial connection" test at two stages in determining whether to enforce a foreign judgment:

  1. Was there a real and substantial connection between the subject matter of the litigation and the foreign court?
  2. Was there a real and substantial connection between the subject matter and the court being asked to recognize and enforce the judgment (in this case, Ontario)?

The motions judge had rejected this double application of the test, citing Morguard Investments Ltd. v. De Savoye  and Beals v. Saldanha  as the leading cases on this issue. The Court of Appeal agreed with this analysis, stating:

"In recognition and enforcement actions relating to foreign judgments in Canadian jurisdictions, the exclusive focus of the real and substantial connection test is on the foreign jurisdiction. There is no parallel or even secondary inquiry into the relationship between the legal dispute in the foreign country and the domestic Canadian court being asked to recognize and enforce the foreign judgment."

The Court of Appeal also rejected Chevron's argument that Club Resorts Ltd. v. Van Breda,  a 2012 decision of the Supreme Court of Canada, changed the Canadian landscape for recognition and enforcement of foreign judgments. Unlike this action for enforcement of a foreign judgment, Van Breda  concerned a court's jurisdiction to adjudicate a tort dispute on its merits where some of the events had taken place outside the territorial jurisdiction of the court. In the case of an action to enforce, there is no constitutional issue because the decision of the court is limited to the enforceability of the judgment in Ontario. The Ontario court's "only inquiry of the foreign court is whether it had a real and substantial connection to the subject matter of the action; once that is established, the analysis shifts to a consideration of whether the judgment is enforceable in Ontario as a matter of domestic law."

Chevron Canada, distinct from the American Chevron, was not a party to the Ecuadorian action and was not found liable under the judgment. However, the motion judge stated:

"In light of the economically significant relationship between Chevron and Chevron Canada, and given that Chevron Canada maintains a non-transitory place of business in Ontario, an Ontario court has jurisdiction to adjudicate a recognition and enforcement action against Chevron Canada's indirect corporate parent that also names Chevron Canada as a defendant and seeks the seizure of the shares and assets of Chevron Canada to satisfy a judgment against the corporate parent."

As such, the Court of Appeal upheld the motion judge's holding that an Ontario court has the jurisdiction to enforce the Ecuadorian judgment against Chevron and Chevron Canada. The question of whether Chevron Canada's assets can be accessed to pay Chevron's judgment debts was not relevant at this juncture, and is an issue to be addressed after the preliminary jurisdictional stage, after Chevron Canada has an opportunity to file a Statement of Defence.

The Stay of Proceedings Order

In their cross-appeal, the Ecuadorian plaintiffs asserted that the motion judge erred by granting a stay of their action on his own discretion. In considering this appeal, the court looked to the test for interfering with a discretionary order as set out in Re Regal Constellation Hotel Ltd.:

"An appeal court will only interfere with such an order where the judge has erred in law, seriously misapprehended the evidence, or exercised his or her discretion based upon irrelevant or erroneous considerations or failed to give any or sufficient weight to relevant considerations."

Overall, the Court of Appeal held that the motion judge erred by granting the stay for a variety of reasons. First, neither party had sought the stay; it was entirely of the judge's own volition that it had been granted. While s.106 of the Courts of Justice Act  entitles the court to grant a stay on its own motion, the circumstances under which it should do so are rare. The Court of Appeal stated that the onus should be even higher where a stay was not actually requested by a party. This is a major case involving poor and vulnerable foreign plaintiffs, a large international corporation, a long and difficult court process and a huge damages award. Under these circumstances, the onus was simply not met.

Secondly, the Court did not accept Chevron's claims that it was an "extraordinary circumstance" that Chevron was precluded from requesting a stay of proceedings on any basis other than jurisdiction. Chevron chose to refuse to attorn to the Ontario court and to cite that basis alone as a basis to resist the action. The company could have accepted jurisdiction and relied on the substantive and procedural law of Ontario to obtain a stay; they chose not to. Having made that decision, the legal tools available to Chevron should have been expected and were not "extraordinary."

Third, the motion judge erred in making determinations about the corporate and legal structures of Chevron and the viability of the plaintiff's action. Such issues should be properly addressed at trial, not on a preliminary motion.

Fourth, the motions judge improperly imported a forum non conveniens  test into his reasoning on jurisdiction simpliciter, despite no such motion being put before him. He made certain assumptions about facts which are at the heart of the conflict, namely the location of Chevron's head office, its places of business and the connection between Chevron and Chevron Canada. It was an error for the judge to order a stay on these grounds absent a proper hearing on these issues.

Fifth, the court found a significant disconnect between the rationale underlying the motion judge's reasoning on the jurisdiction issue, and the content of his reasons on the discretionary stay issue. His discretionary stay analysis points to a myriad of factors that suggest that the case not be heard in Ontario. While these factors may ultimately derail the enforcement action in Ontario, it was premature to order a stay at this juncture, given that no party raised the issue of a discretionary stay, there were no arguments on the question of a stay, and the devastating consequences such a stay would have on the plaintiffs.

Finally, the Court of Appeal disagreed with the motion judge's concern that, if a stay were not granted, a bitter and protracted fight would ensue where there is "nothing to fight over." A party may bring an action for many different strategic reasons, recognizing that they may have little chance of collecting on the judgment. The Court of Appeal stated that "it is not the role of the court to weed out cases on this basis and it is a risky practice for a judge to second-guess counsel on strategy in the name of judicial economy."

As such, the Court of Appeal overturned the motion judge's discretionary stay of proceedings, stating "the court should grant its assistance in enforcing an outstanding judgment, not raise barriers."

CITATION: Yaiguaje v. Chevron Corporation, 2013 ONCA 758

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions